Cabinet revolt over John Healey's plans for raid on banks as he struggles to balance books in Budget

Published: 09:55 EDT, 4 October 2026 | Updated: 09:56 EDT, 4 October 2026 John Healey is facing a Cabinet revolt over higher taxes on banks as he puts together his first Budget, it has emerged.The Chancellor is said to have been warned that a raid on the sector later this month will threaten Prime Minister Andy Burnham's promise of economic growth.It comes ahead of a summit between Mr Healey and the chiefs of the UK's biggest banks on Tuesday.Bosses of Lloyds Banking Group, Barclays, HSBC and NatWest Group are expected to attend as they mobilise to intensify their opposition to higher levies.Ahead of his first fiscal showpiece on 28 October, Mr Healey is facing calls by trade union leaders for a tax raid on banks to fund a cut to energy bills this winter.The Chancellor is also having to find billions of pounds to fund the Government's Defence Investment Plan, while his fiscal headroom is said to have halved to around £12billion due to the impact of the Iran war and rising cost of public borrowing. John Healey is facing a Cabinet revolt over higher taxes on banks as he puts together his first Budget, it has emergedBut JP Morgan chief executive Jamie Dimon has warned against hiking the surcharge on banks' profits, saying it could push investment to other countries.Senior ministers told The Telegraph they are against a tax on banks as they believe this would send the wrong message to businesses looking to invest in the UK.One minister said it was unwise to tax 'everything at once', noting that businesses were already struggling with the hike to business rates and National Insurance contributions.Treasury sources told the newspaper that Mr Healey would be in 'listening mode' during his summit with banking chiefs on Tuesday.Tax paid by the banking sector increased by 8.5 per cent to £39.1billion in the 2025-26 tax year, compared with the previous year, HMRC figures show.Receipts from the surcharge, which banks pay on their profits, jumped by a fifth year-on-year, largely because profits across the industry have risen.The surcharge is levied at a rate of 3 per cent but the Trades Union Congress is among those calling for that to rise to at least 8 per cent, which it said would raise £9 billion for the Treasury over four years.A Treasury spokesman said: 'As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.'